The J. M. Smucker Company (NYSE:SJM) is included among the 15 Best Blue-Chip Stocks with Growing Dividends. BofA Sees Steady Earnings Momentum Building at J.M. Smucker (SJM) On November 26, BofA lifted its price target on The J. M. Smucker Company (NYSE:SJM) to $120 from $118 while maintaining a Neutral rating. The update followed the company’s Q2 results, where adjusted EPS edged past BofA’s expectations. In response to this, the firm nudged up its longer-term outlook, raising its FY27 adjusted EPS esti ...

Core Viewpoint - Dividend stocks have underperformed compared to tech and AI stocks this year, but they still hold long-term value due to their ability to provide consistent income and reduce portfolio volatility [1][2]. Group 1: Importance of Dividend Stocks - Dividend-paying stocks can help meet ongoing income or liquidity needs and historically reduce volatility during market downturns [2]. - Companies with stable financials are better positioned to maintain dividends, with a focus on payout ratios to assess sustainability [3]. Group 2: Methodology for Stock Selection - The article screened for companies with a market cap above $10 billion and at least 10 years of dividend growth, identifying 15 stocks with positive analyst sentiment and high hedge fund interest [6]. Group 3: The J. M. Smucker Company (NYSE:SJM) - The J. M. Smucker Company has 41 hedge fund holders and has seen an increase in its price target from $118 to $120 by BofA following positive Q2 results [9][10]. - The company reported Q2 net sales of $2.3 billion, a 3% increase year-over-year, with a coffee segment profit margin of 18.2% [12][11]. Group 4: Colgate-Palmolive Company (NYSE:CL) - Colgate-Palmolive has 56 hedge fund holders but faced a downgrade to Hold from Buy due to rising raw material costs impacting profitability [14][15]. - The company reaffirmed its long-term strategy and highlighted its focus on innovation and efficiency improvements [16][17]. Group 5: American Electric Power Company, Inc. (NASDAQ:AEP) - American Electric Power has 56 hedge fund holders, with a price target increase from $121 to $125 by JPMorgan, reflecting positive adjustments in the utilities sector [20]. - The company anticipates a 7%-9% long-term EPS growth outlook, driven by increasing demand from data centers, and has raised its capital investment plan to $72 billion [22][21].

Financial Data and Key Metrics Changes - The company reported a sequential acceleration in comparable net sales growth, with a projected top line growth of 4% on a reported basis and about 5.5% comparable growth year over year [40][68] - The second quarter segment profit margin in coffee was 18.2%, with expectations for slight improvement in the third quarter but not surpassing 20% [37] Business Line Data and Key Metrics Changes - Organic sales in the sweet baked snacks segment exceeded expectations, with improved performance noted in convenience stores and a focus on a streamlined portfolio [7][20] - The sweet baked snacks bottom line did not meet expectations due to costs absorbed during the transition of the bakery network, but improvements are anticipated in the third and fourth quarters [20][21] - The pet portfolio is expected to see low single-digit growth in the third and fourth quarters, driven by the Milk-Bone and Meow Mix brands [25][24] Market Data and Key Metrics Changes - The company anticipates a $75 million impact from coffee tariffs in the third quarter, which will be a headwind for fiscal 2026 but a tailwind for fiscal 2027 [10][16] - The spreads portfolio, particularly peanut butter, faced challenges in the second quarter, contributing to a reduced net sales expectation for frozen handhelds and spreads [27][30] Company Strategy and Development Direction - The company is committed to investing in long-term brand health, with marketing dollars projected to increase year-over-year, maintaining about 5.5% of net sales [18] - A three-pronged plan to strengthen the portfolio by eliminating 25% of SKUs has shown positive results, particularly for core brands [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlooks for the fiscal year while advancing long-term objectives to increase shareholder value [70] - The company expects to see acceleration in growth across various segments, with a focus on innovation and marketing support [41][48] Other Important Information - The company is on track to achieve $975 million in free cash flow this fiscal year, supporting $500 million in debt repayment [62] - The pace of innovation has accelerated across various product lines, with notable advancements in Uncrustables and pet snacks [61] Q&A Session Summary Question: Insights on sweet baked goods performance - Management noted that the improvement in sweet baked snacks is sustainable, with a focus on core brands and a successful relaunch of Susie Q's [7] Question: Impact of tariffs on coffee pricing - The majority of the $0.50 tariff impact is related to green coffee tariffs, which will be a tailwind for fiscal 2027 [10] Question: SG&A guidance and marketing plans - Marketing investments will increase year-over-year, with a focus on growth brands while managing discretionary spending [18] Question: Profit results in sweet baked snacks - The second quarter's profit results did not meet expectations due to transitional costs, but improvements are expected in subsequent quarters [20] Question: Expectations for pet treats - Management anticipates strong growth for Milk-Bone in the third quarter, supported by marketing campaigns and innovation [24] Question: Reduced net sales expectation for frozen handhelds - The reduction is primarily driven by the spreads portfolio, with Uncrustables still on track for significant growth [27][30] Question: Coffee margin expectations - Coffee margins are expected to improve slightly in the third quarter but will not exceed 20% [37] Question: Tariff impact confirmation - The $75 million tariff expense is confirmed to be entirely due to coffee tariffs [58]

Financial Data and Key Metrics Changes - The company reported a sequential acceleration in comparable net sales growth, with a projected top line growth of 4% on a reported basis and about 5.5% comparable growth year over year [40][68] - The second quarter segment profit margin in coffee was 18.2%, with expectations for slight improvement in the third quarter but not surpassing 20% [37] Business Line Data and Key Metrics Changes - Organic sales in the sweet baked snacks segment exceeded expectations, with improved performance noted in convenience stores and a focus on a more streamlined portfolio [7][20] - The sweet baked snacks bottom line did not meet expectations due to costs absorbed during the transition of the bakery network, but improvements are anticipated in the third and fourth quarters [20][21] - The pet portfolio is expected to see low single-digit growth in the third and fourth quarters, driven by brands like Milk-Bone and Meow Mix [25][24] Market Data and Key Metrics Changes - The company anticipates a strong lap in the third quarter for the pet treats category, particularly for Milk-Bone, which is expected to return to growth [22] - The frozen handheld and spreads segment is projected to see a reduction in net sales expectations by over $80 million for the full year, primarily driven by the spreads portfolio [27][28] Company Strategy and Development Direction - The company is committed to investing in the long-term health of its brands, with marketing dollars projected to increase year-over-year, maintaining about 5.5% of net sales [18] - A three-pronged plan to strengthen the portfolio by eliminating 25% of SKUs has been implemented, leading to improved performance in core brands [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlook for the fiscal year while advancing long-term objectives to increase shareholder value [70] - The company expects to benefit from a tariff-off environment in fiscal 2027, which should provide a tailwind to the coffee portfolio [42][43] Other Important Information - The company is on track to generate $975 million in free cash flow this fiscal year, supporting $500 million in debt repayment [62] - The pace of innovation across various product lines has accelerated, with notable advancements in Uncrustables and pet snacks [61] Q&A Session Summary Question: Insights on sweet baked goods performance - Management noted that the improvement in sweet baked snacks is sustainable, with a focus on core brands and a successful relaunch of Susie Q's [7] Question: Impact of tariffs on coffee pricing - The majority of the $0.50 tariff impact is related to green coffee tariffs, which will be a tailwind in fiscal 2027 [10][16] Question: SG&A guidance and marketing plans - Marketing investments will increase year-over-year, with a focus on growth brands while managing discretionary spending [18] Question: Profit results in sweet baked snacks - The second quarter's bottom line for sweet baked snacks did not meet expectations due to transition costs, but improvements are expected in subsequent quarters [20] Question: Expectations for pet treats in the back half - Management anticipates strong growth for Milk-Bone in the third quarter, supported by marketing efforts and innovation [22][24] Question: Reduced net sales expectation for frozen handheld and spreads - The reduction is primarily driven by the spreads portfolio, with Uncrustables still on track for significant growth [27][28] Question: Coffee margin expectations - Coffee margins are expected to improve slightly in the third quarter but will not exceed 20%, with a target of over 20% in the fourth quarter [37] Question: Elasticity and pricing in coffee - The current outlook for the coffee portfolio includes 16% year-over-year growth, with pricing offset by a decline in volume mix [45] Question: Innovation pace and its impact - The pace of innovation has accelerated, with significant contributions from new products across various categories [61]

Financial Data and Key Metrics Changes - The company reported a second quarter segment profit margin in coffee of 18.2% with expectations for slight improvement in the third quarter but not surpassing 20% [41] - The company anticipates a net $0.50 impact from tariffs in fiscal year 2026, which will transition to a tailwind in fiscal year 2027 [11][17] Business Line Data and Key Metrics Changes - Organic sales in the Sweet Baked Snacks segment exceeded expectations, with a focus on core brands leading to improved performance [6][7] - The Sweet Baked Snacks bottom line did not meet expectations due to costs associated with the transition of the bakery network [21] - The pet portfolio is expected to see low single-digit growth in the third and fourth quarters, driven by brands like Milk Bone and Meow Mix [26] Market Data and Key Metrics Changes - The company is seeing strong growth in the away-from-home segment, contributing to overall sales momentum [45] - The Uncrustables brand is projected to reach $1 billion in sales by the end of the fiscal year, with low double-digit growth anticipated in the second half [54] Company Strategy and Development Direction - The company is committed to investing in long-term brand health, with marketing dollars projected to be up year over year [19] - A three-pronged plan to strengthen the portfolio by eliminating 25% of SKUs has been implemented, leading to improved performance in core brands [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlook for the fiscal year while advancing long-term objectives to increase shareholder value [75] - The company expects to see benefits from tariff relief in fiscal year 2027, contributing positively to the bottom line [48] Other Important Information - The company is focused on innovation across various segments, with notable advancements in Uncrustables and pet snacks [65] - The company aims to reduce net debt to EBITDA from around four times to three times by fiscal year 2027 [67] Q&A Session Summary Question: How sustainable is the improvement in Sweet Baked Snacks? - Management noted that the improvement is sustainable due to a focused portfolio and strong brand performance [6][8] Question: What is the impact of tariffs on coffee pricing? - The majority of the $0.50 tariff impact is related to green coffee, which will be a tailwind in fiscal year 2027 [11][17] Question: What are the expectations for marketing plans and SG&A? - Marketing investments will increase year over year, while SG&A spend has been sharpened across the network [19] Question: What is the outlook for the pet treats category? - Management expects a strong lap in the third quarter, with Milk Bone anticipated to return to growth [23][24] Question: How is the company addressing pricing in the current environment? - The company is committed to holding prices and providing value across its broad portfolio [71] Question: What is the expected growth for Uncrustables? - Uncrustables is expected to achieve low double-digit growth in the second half, supporting its path to $1 billion in sales [54] Question: How is the company managing innovation? - The pace of innovation has accelerated, with significant developments in various product lines [65] Question: What is the company's strategy for debt reduction? - The company plans to generate $975 million in free cash flow this fiscal year to support debt paydown [67]

Financial Data and Key Metrics Changes - Net sales increased by 3% in the second quarter, with comparable net sales rising by 5% after excluding prior year sales related to divested businesses and foreign currency exchange [21] - Adjusted gross profit decreased by $90 million, or 10%, compared to the prior year, primarily due to higher commodity costs and unfavorable volume mix [22] - Adjusted earnings per share was $2.10, a decrease of 24% versus the prior year [23] Business Line Data and Key Metrics Changes - Uncrustables brand net sales grew by 7% at the total company level, with significant household penetration potential remaining [4][5] - Café Bustelo brand net sales increased by 41% in the U.S. retail coffee portfolio, driven by distribution expansion and marketing investments [8] - Milk-Bone brand showed sequential improvement in net sales growth, with expectations to return to growth in the latter half of the fiscal year [9] - Meow Mix brand outpaced the dry cat food category, growing sales nearly three times the category rate [11] Market Data and Key Metrics Changes - U.S. retail coffee segment net sales increased by 21%, driven by higher pricing to recover increased commodity costs [23] - U.S. retail frozen handheld and spreads saw a net sales decrease of 5%, primarily due to declines in peanut butter and fruit spreads [24] - U.S. retail pet foods net sales decreased by 7%, reflecting a decline in dog snacks [25] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating organic growth, embedding transformation, and fostering a be-bold mindset [3] - The company aims to position the Uncrustables brand to generate over $1 billion in net sales by the end of the fiscal year [7] - The Hostess brand strategy includes reducing SKU count by 25% to simplify offerings and prioritize high-velocity products [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic environment, focusing on elements within their control to drive long-term growth [20] - The company anticipates full-year net sales guidance to increase by 3.5%-4.5%, reflecting challenges from divested businesses [29] - Adjusted earnings per share guidance range is narrowed to $8.75-$9.25, maintaining the previous midpoint [33] Other Important Information - Free cash flow for the second quarter was $280 million, down from $317 million in the prior year [28] - The company plans to prioritize debt reduction, aiming to pay down $500 million of debt annually [28] Q&A Session Summary - No specific questions and answers were provided in the content, thus this section is omitted.

Financial Data and Key Metrics Changes - Net sales increased by 3% in the second quarter, with comparable net sales rising by 5% after excluding prior year sales related to divested businesses and foreign currency exchange [22] - Adjusted gross profit decreased by $90 million, or 10%, compared to the prior year, primarily due to higher commodity costs and unfavorable volume mix [23] - Adjusted earnings per share was $2.10, a decrease of 24% versus the prior year [24] Business Line Data and Key Metrics Changes - Uncrustables brand net sales grew by 7% at the total company level, with significant household penetration potential remaining [4][5] - Café Bustelo brand net sales increased by 41% in the U.S. retail coffee portfolio, driven by distribution expansion and marketing investments [8] - Milk-Bone brand showed sequential improvement in net sales growth, with expectations to return to growth in the latter half of the fiscal year [9][10] - Meow Mix brand outpaced the dry cat food category, growing sales nearly three times the category rate [11] Market Data and Key Metrics Changes - U.S. retail coffee segment net sales increased by 21%, with net price realization contributing significantly to this growth [24] - U.S. retail frozen handheld and spreads saw a net sales decline of 5%, primarily due to decreases in peanut butter and fruit spreads [25] - U.S. retail pet foods experienced a 7% decrease in net sales, driven by declines in dog snacks [26] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating organic growth, embedding transformation, and fostering a be-bold mindset [3] - The strategy includes significant investments in brand-building and innovation, particularly for key growth platforms like Uncrustables and Café Bustelo [4][7] - The company aims to stabilize and position the Hostess brand for long-term growth through SKU reduction and improved marketing [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic environment, emphasizing the importance of controlling internal factors [21] - The company anticipates continued double-digit growth for the Café Bustelo brand and a positive outlook for the Uncrustables brand [9][18] - Future growth opportunities are expected in the away from home business, which is projected to grow to approximately 10% of total company net sales this fiscal year [20] Other Important Information - Free cash flow for the second quarter was $280 million, down from $317 million in the prior year [29] - The company plans to prioritize debt reduction, aiming to pay down $500 million of debt annually [29] - Full-year net sales guidance is narrowed to an increase of 3.5%-4.5%, reflecting various headwinds from divested businesses [30][31] Q&A Session Summary Question: What are the growth expectations for the Uncrustables brand? - The Uncrustables brand is on track to generate over $1 billion in net sales by the end of the fiscal year, with significant household penetration potential remaining [7] Question: How is the company addressing commodity cost pressures? - The company is managing commodity costs through flexible pricing strategies and anticipates normalization over time [16] Question: What is the outlook for the Hostess brand? - The Hostess brand is expected to stabilize performance and position for sustainable long-term growth through strategic actions and marketing efforts [15]

Market Overview - The stock market experienced a strong finish in 2024, driven by optimism around potential tax cuts and a robust M&A environment, but sentiment shifted in early 2025 due to concerns over tariffs, AI spending, and consumer health [2][3] - A remarkable recovery occurred in the second quarter of 2025, with U.S. equities approaching all-time highs, primarily led by large-cap technology and growth stocks, especially those related to AI and semiconductors [3] Fund Performance - Ariel Focus Fund gained +4.75% for the three-month period ending June 30, 2025, outperforming its primary Russell 1000 Value Index, which rose +3.79%, but lagged behind the S&P 500, which jumped +10.94% [4] - Key contributors to the fund's performance included Oracle Corporation, Mosaic Company, and Resideo Technologies, while J.M. Smucker Company, APA Corporation, and Core Laboratories were the largest detractors [4][10][12] Company Insights - Oracle Corporation's shares reached an all-time high of over $245, driven by a potential $30 billion annual cloud contract with OpenAI and a doubling of its backlog, highlighting its strong long-term positioning in AI-driven enterprise software [6] - Mosaic Corporation's stock rose +35.88% due to favorable trade dynamics and a renewed focus on cost discipline, benefiting from increased demand for fertilizers driven by economic growth in developing countries [7][8] - Resideo Technologies rebounded with a +24.63% gain, supported by its leadership in smart home technology, despite challenges from a sluggish U.S. housing market [9] Challenges Faced - J.M. Smucker Company faced a -16.28% decline, primarily due to disappointing results from Hostess Brands, which saw a -14% drop in comparable revenue [10] - APA Corporation and Core Laboratories experienced declines of -11.62% and -23.09%, respectively, amid concerns about the energy sector's future despite ongoing demand for oil and gas [12][13]

Core Insights - The rise of private label products is prompting more consumer packaged goods (CPG) manufacturers to take legal action against retailers for alleged imitation of their products [2][3][7] Group 1: Legal Actions - J.M. Smucker has filed a lawsuit against Trader Joe's, claiming that its crustless PB&J sandwiches are a clear imitation of Smucker's Uncrustables [2] - Mondelēz International has also sued Aldi, alleging that the grocery chain's snack products replicate the packaging of well-known brands like Oreos and Chips Ahoy! [2] Group 2: Market Dynamics - Private label products, once considered inferior, have become significant competitors in the market, available in various retail environments from small stores to large chains like Walmart and Costco [3] - Private label is projected to account for over 20% of food and grocery sales by 2025, up from 12% two decades ago, with sales reaching a record $271 billion in 2024, marking a 3.9% increase from the previous year [4][5] Group 3: Consumer Behavior - Inflation has led consumers to seek cost-saving options, making private label products more appealing [5] - Retailers are investing more in enhancing the quality and value of private label offerings, contributing to their growth [5] Group 4: Competitive Landscape - The competition between national brands and private label products is intensifying, with manufacturers increasingly willing to defend their market share through legal means [3][7] - The relationship between private label retailers and branded products is described as a "game of cat and mouse," where retailers attempt to closely mimic popular items to attract consumers [6][7]

Core Points - J.M. Smucker Company, known for Jif Peanut Butter and Uncrustables, has filed a lawsuit against Trader Joe's for allegedly replicating the design and packaging of Uncrustables [2][3][4] - Uncrustables has become a billion-dollar brand, generating approximately $920 million in annual sales, reflecting a 15% year-over-year increase [5][6] - The brand represents over 10% of J.M. Smucker's total revenue, highlighting its significance to the company's financial performance [6] Company Overview - J.M. Smucker has invested over $1 billion in the development and marketing of Uncrustables, which are frozen, pre-made sandwiches filled with peanut butter and jelly [5][6] - The company recently opened a $1.1 billion production facility in Alabama to meet rising demand, marking one of its largest capital investments [6] Industry Context - Trader Joe's operates a private-label business model, offering affordable, high-quality store-brand alternatives that compete with national brands [8] - The lawsuit reflects the competitive tension within the private-label market, where Trader Joe's has built a loyal customer base through exclusive products [8]